Economics and astrology

David J Griffiths in his Millikan lecture 1997: Is there a text in this class? makes the following statement:

People who believe in UFOs and astrology are, on the whole, merely pathetic, but those who think you can run a modern society without taxes are downright dangerous.

The piece of Ashok Desai in Telegraph reminded me of this statement of Griffiths; Desai has some recommendations to the prime minister:

Growth of manufacturing output has been close to zero in recent months; industrial investment is also negligible. Till six months ago, this could be blamed on the UPA government. Industrialists did so, and funded the Bharatiya Janata Party generously. But the economic environment has hardly improved; if it continues to be bad for another six months, the industry-BJP honeymoon will also turn sour. The Prime Minister’s solution – asking foreign businesses to come to India – will not solve the problem.

If he wants a serious answer, Raghuram Rajan gave one in his Bharat Ram memorial lecture. It is well thought-out. Rajan is in the wrong job. He should be finance minister; Jaitley might do a better job in external affairs. And for commerce and industry, the Prime Minister simply does not have a minister in his party; it calls for abolition or a radical reconstruction – what we used to call reforms two decades ago.

Economists do have ideologies, but are generally not party creatures. No respectable economist has Hindu nationalist inclinations: the ideology is mistaken according to economics. So it was no wonder that Jaitley made the first budget in India’s history without a chief economic advisor. Now he has one – a very good one – who organized a conference of economists in the first week of December. It was a good idea, but for the fact that the distinguished economists who had been flown in from abroad had little idea of the problems facing India.

But the planning commission has been emptied, and remains a shell. The Prime Minister has got one big office building close to his office, with no people in it. In my column of September 3, I suggested that he should create a think tank that would connect India’s 139 best economists with policymakers through an equal number of research assistants. It did not strike me then, but it would not work, because Modi’s ministers are largely incapable of using economists or research assistants. Meanwhile, we have the most desperate economic situation in 60 years, and the present government has to live through it. It is important in these difficult times that it should have the best judgment and counsel available to it. The Prime Minister should revive his predecessor’s Economic Advisory Council, appoint any economists he likes to it, and consult it frequently; he cannot do without economics.

A good piece!

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